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Armugha Mudeliar Vs. Yagamba Bai Ammani and ors. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in17Ind.Cas.323
AppellantArmugha Mudeliar
RespondentYagamba Bai Ammani and ors.
Cases ReferredThimboo Pillay v. Sriramulu Naidu
Excerpt:
civil procedure code (act 7 of 1908), section 42, order xxi, rules 16 and 53 - attachment of decree for mesne profits--assignment of decree after attachment--part consideration intended to benefit assignor and defeat creditors--fraudulent assignment--right of assignee to execute decree--determination of equities between assignee and attachers in execution--assignee entitled to charge for consideration paid by him--rights of attachers where attachment not made by court passing decree--attachment of decree by judgment-debtor--right to execute. - .....law. assuming that an assignee of a decree has not, in all cases, an absolute right to enforce his right by execution and that there may be complicated equities arising out of the assignment which could not properly be made the subject matter of execution proceedings, see yakoob ali chowdry v. ramdoolal 13 c.l.r. 272 that does not in any way affect the rights as between the assignee and the attaching creditor. when the assignment is after an attachment, it will, of course, be subject to the rights of the attacher just as the assignor's right itself would be; but it is difficult to see why this should interfere with the assignee's right to stand in the shoes of the assignor and as, according to rule 53, clause 2 of order xxi of the code of civil procedure, a person, whose decree has been.....
Judgment:

Sundara Aiyar, J.

1. This appeal arises out of an application for execution of the Subordinate Judge's Court of Tanjore in Original Suit No. 13 of 1903. The application was dismissed by the Subordinate Judge. The appellant is the assignee of the decree under a document dated 5th July 1909. The decree was for possession of certain lands, mesne profits and costs. The appellant obtained an assignment only so far as the award of mesne profits and costs was concerned. Prior to the assignment, the decree had been attached by several persons who had, obtained decrees against the assignor, Yogamba Boyi Ammani. Of these, the 16th respondent made the attachment in execution of his decree in Small Cause Suit No. 905 of 1903, on the file of the Subordinate Judge's Court of Tanjore; his attachment was in October 1904. The 17th respondent was the decree-holder in Original Suit No. 53 of 1905, on the file of the District Munsif's Court of Tiruvadi; his decree was transferred for execution to the Tanjore District Munsif's Court, and the attachment was made by the latter Court on the 5th August 1905. The 18th respondent was the decree-holder in Original Suit No. 313 of 1905, in the Tiruvadi District Munsif's Court, who got his decree transferred to the District Munsif's Court of Tiruvalur which attached this decree on 13th March 1909. The assignor of the decree is the 1st respondent. She did not appear to contest the appellant's application. The judgment-debtors resisted the petition on the ground that the assignment was fraudulent and unsupported by consideration. The attaching decree-holders also contested the appellant's right to execute the decree and supported the contentions of the judgment-debtors. The amount due to the assignor under the decree at the time of the assignment was about Rs. 3,500. The consideration for the assignment was Rs. 2,500 of which Rs. 2,000 was due to the assignee from the assignor on account of the decree obtained by the appellant against her in Original Suit No. 60 of 1905 on the file of the Tiruvadi District Munsif's Court and a sum of Rs. 230 was paid by the assignee to one Ismalsa Rowther on the assignor's account. The remaining amount of Rs. 270 has been found by the Subordinate Judge not to have been paid to the appellant. He apparently was not willing to pay it until his assignment was recognised by the Court executing the decree. The Subordinate Judge held that Yogamba Boyi Ammani, the assignor, was heavily indebted to various persons at the time of the assignment and that, besides the decree in question, her property consisted of only 10 velis of land, her life-interest in which was of precarious value. He was of opinion that there must have been some secret arrangement between Yogamba Boyi Ammani, and the appellant and that the consideration set forth in the assignment deed was not, to use his own words, the real consideration or the whole consideration for it,' and that the assignment was made with a view to defeat the rights of all those who had already attached the decree under the impression that the attachments already made were legally defective and might be successfully impeached. He held that the assignment deed did not evidence a bona fide transaction, and that it was not supported by real or proper consideration.

2. I am unable to understand what the Subordinate Judge means by the observation that the consideration was not real, in the face of his finding that the assignee had a decree for Rs. 2,000 against the assignor and that he paid a further sum of Rs. 230 for the assignment. The non-payment of the remaining sum of Rs. 270 would not invalidate the assignment as between the appellant and Yogamba Boyi Ammani and the latter's right would only be to recover it from the appellant. If there was any secret understanding that she should be entitled to receive from the appellant any further amount subsequently, it may possibly be that she would be entitled to recover that also. But all this would not entitle her to dispute the validity of the assignment. What the Subordinate Judge apparently means is, that the difference between the real value of the decree and the consideration for the assignment was intended to go to Yogamba Boyi Ammani, and that she and the appellant combined to defeat the rights of her creditors. It is clear that the consideration was inadequate and that the object was to benefit Yogamba Boyi Ammani to the extent of Rs. 1,000 or thereabouts, at the expense of her creditors by converting the decree which would be easily available to the creditors for execution into cash which she could easily conceal from them. Such a transaction must be held to be fraudulent and invalid as against the creditors and would not affect their rights to proceed against the decree as being still the property of Yogamba Boyi Ammani. See Chidambaram Chettiar v. Samy Iyer 16 M.L.J. 427 : 1 M.L.T. 351 and Ishan Chunder Das Sarkar v. Bishu Sardar 1 C.W.N. 665. But the appellant is entitled against the creditors to a charge for the amount actually paid by him. If the attachments in question, which were all prior in date to the assignment, are valid, his charge would be subject to the rights of the attachers. Mr. Seshagiri Aiyar, who appears for some of the attaching creditors, contends that the assignee is not entitled to take out execution and relies on the judgment of this Court in Thiruvengadam Pillai v. Doredla Subbiah (1912) 1 M.W.N. 176. That case, no doubt, seems to support his contention. There, the assignment was prior to the date of the attachment of the decree. Benson and Abdur Rahim, JJ., held that, according to Order XXI, Rule 53, Clause (2) of the Civil Procedure Code, only an attaching creditor or his judgment-debtor, i.e., the original holder of the decree attached, was entitled to execute the attached decree. With all deference, I am unable to agree with this ruling. Rule 16 of the Order entitles an assignee in writing of a decree to apply for execution and proceeds to state: 'The decree may be executed in the same manner and subject to the same conditions as if the application were made by such decree-holder.' That recognises the indubitable principle that the assignee has the same rights as the assignor. There is no reason to suppose that the attachment of a decree in any way curtails the rights of the assignee of it. In the case before the learned Judges, the assignment was prior to the attachment so that the attacher had nothing which he could validly attach in law. Assuming that an assignee of a decree has not, in all cases, an absolute right to enforce his right by execution and that there may be complicated equities arising out of the assignment which could not properly be made the subject matter of execution proceedings, see Yakoob Ali Chowdry v. Ramdoolal 13 C.L.R. 272 that does not in any way affect the rights as between the assignee and the attaching creditor. When the assignment is after an attachment, it will, of course, be subject to the rights of the attacher just as the assignor's right itself would be; but it is difficult to see why this should interfere with the assignee's right to stand in the shoes of the assignor and as, according to Rule 53, Clause 2 of Order XXI of the Code of Civil Procedure, a person, whose decree has been attached, may apply for execution notwithstanding the attachment, his assignee must be held entitled to have the same right. According to Section 273 of the repealed Code, the attacher alone apparently could apply for execution of the attached decree. See Thuchakovil Unni Koya v. Arapayil Pathuthi Umma (1911) 1 M.W.N. 187 although Maclean, C.J., even there held that the holder of an attached decree could apply for execution. See Adhar Chandra Das v. Lal Mohan Bass 1 C.W.N. 676. But, Order XXI, Rule 53, of the present Code, clearly recognises the right of the attacher's judgment-debtor also to execute his decree. Whichever of the two may take out execution, he must, of course, hold the proceeds realised in execution in trust for the satisfaction of the rights of the attacher in the first instance and the balance for the benefit of the holder of the attached decree. I must, therefore, overrule the contention that, in consequence of the attachment, the assignor became incompetent to execute the decree. I have already found that the assignment in this case was in fraud of the assignor's creditors. Does this disentitle him to take out execution? As already observed, his assignment is perfectly good against the assignor. It must also be valid against the judgment-debtors of the assignor; they have no right to say that only the assignor and not the assignee should have execution against them. The assignment, no doubt, will not prevent the creditors from proceeding against the decree as if it still remained the property of the assignor. What is the legal result of such a state of affairs? I think, it must be taken to be that the assignment, though valid as between the parties to it, is subject to the rights of creditors, including both these who may have already attached the decree and other creditors who might proceed against the decree notwithstanding the assignment. But the assignee may, like the assignor, himself take out execution against the judgment-debtors; the proceeds of execution will, however, be subject in his hands to a trust for the creditors whose rights were sought to be defeated by the assignment. The assignor himself having parted with all his rights is no longer entitled to the benefit of the decree. There is no principle on which he can be held to be the legal owner and a trustee for his assignee whose rights are perfect as against himself. There is, therefore, no reason for holding that the assignee is altogether disentitled to execute.

3. The appellant contends that he is entitled to an order for execution without any determination of the rights of the attaching creditors-respondents and that they have no right to intervene at all in these proceedings. I do not think that this contention should prevail. It does not appear that any of the attaching creditors has yet applied for execution of the attached decree. But if their attachments are valid, they have obtained substantial rights in the decree and they are interested in resisting the appellant's right to execution and in getting their own rights to payment out of the proceeds of execution recognised in priority to appellant's rights. If the property in question were not a decree but, say, immoveable property, they would, according to the recognised procedure, be entitled to attach it notwithstanding a fraudulent alienation by their judgment-debtor and the alienee would have to assert his right to the property by a claim petition and any order passed on such a petition would be subject to the right of the unsuccessful party, whether the assignee or the attaching creditor, to establish his right by a regular suit. As the property in question is a decree, both the assignee and the attaching creditor are, according to the Civil Procedure Code, persons entitled to apply for the execution of the decree. They must, therefore, both be entitled to get an adjudication as to whether either has a right to execute and what their rights of priority are. An assignor, as well as an attaching creditor, is a representative of the original decree-holder; and when the attaching creditor impeaches the right of the assignee to execute, he is entitled to urge his objection in execution proceedings to the assignee's right to take out execution. I cannot, therefore, hold that the attachers had no right to intervene in these proceedings.

4. The appellant next contends that all the attachments in question made by the several respondents are invalid. I. shall deal with them separately. The objection taken to the attachment of the 17th and 18th respondents, the holders of decrees in Original Suit No. 56 of 1905 and Original Suit No. 313 of 1905 on the file of the Court of the District Munsif of Tiruvady, respectively, is, that they were not made by the Courts which passed those decrees but by the Courts to which they were transferred. It is, no doubt, true that, according to Rule 53 of Order XXI, the issue of a notice to the Court which passed the decrees sought to be attached to stay the execution of the decree until the cancellation of the notice or an application for execution of the decree to be attached by the attacher or his judgment-debtor, should be made by the Court, which passed the decree in execution of which the attachment is sought. But, is an order of attachment by the Court actually executing the decree after its transfer to it from the Court which passed it, altogether void? According to Section 42 of the Code of Civil Procedure, 1908, the Court executing a decree has the same powers of executing it as if it had been passed by itself. There are, no doubt, special provisions which direct that applications of particular kinds relating to execution should be made to the Court which passed the decree. But, assuming that Section 42 does not show that the executing Court may also attach a decree of another Court, the defect in the attachment in consequence of the order being passed by the executing Court instead of by the Court which passed the decree is not such a jurisdictional defect as to make the order void. In Thamboo Pillay v. Sriramulu Naidu 17 M.L.J. 300 Benson and Miller, JJ. held that the objection to the jurisdiction of a Court, to which a decree was transferred for execution, to issue notice to the legal representatives of a deceased judgment-debtor with a view to execution issuing against them, was one which could be waived. I am of opinion that an objection to the issue of the notices required under Order XXI, Rule 53, Clause (2) is similarly one that the parties could waive. The attachment of the 17th respondent in execution of his decree was made in August 1905. Although, according to Section 273 of the repealed Procedure Code which was then in force, it was not incumbent on the attaching Court to issue notice of the order to the holder of the attached decree, it is impossible to hold that Yogamba Boyi Ammani was unaware of the attachment for a period of nearly four years after it was made. The assignment was in reality made, as already stated, to defeat the rights of the attachers by taking advantage, if possible, of supposed defects in the attachment.

5. The 18th respondent's attachment in execution of his decree in Original Suit No. 313 of 1905 was on the 13th March 1909, nearly four months before the assignment. Yogamba Boyi Ammani must have received notice of the order of the attaching Court as Rule 53 of Order XXI of the present Code makes provision for the issue of such notice. She raised no objection to the attachment but tried to defeat it by means of an alienation to the appellant. I must hold that she waived any objection to the attachments of the 17th and 18th respondents by her acquiescence and the appellant, her assignee, cannot be permitted to raise any objections that she herself did not.

6. The objection to the 16th respondent's attachment is different. He was himself one of the judgment-debtors in Original Suit No. 13 of 1903, on the file of the Court of the Subordinate Judge of Taojore, the decree attached by him. It is contended that he could not, as an attaching creditor, obtain a right to execute the decree passed against himself and other judgment-debtors. It is really unnecessary to decide at the present stage whether there could be any valid objections to his taking out execution. It does not appear that he has applied for execution of the decree in Original Suit No. 13 of 1933. It does not appear further that the other judgment-debtors in Original Suit No. 13 of 1903 would raise any objection to his claim to execute the decree. The appellant's objection is rested on the proviso to Rule 16 of Order XXI that 'Where a decree for the payment of money against two or more persons has been transferred to one of them, it shall not be executed against the others.' This rule does not make the assignment of a decree in favour of one of several judgment-debtors invalid in law. It only provides that the transferee is not entitled to enforce his rights by execution of the decree. It will be noticed that the rule refers only to the rights of the transferee of a money-decree. An attaching creditor is not a transferee for the purposes of execution: he is declared to be the representative-in-interest of the decree-holder whose right he attaches. It is doubtful whether Rule 16 which lays down merely a rule of procedure can be applied to oases to which its language does not in terms extend. The attacher in seeking to execute the decree stands in the shoes of the holder of the decree and holds the proceeds of the execution in trust for himself and the original decree-holder. No doubt, if he is permitted to take out execution, he may be enabled to realize the amount of the decree from his co-judgment-debtors along leaving them to assert their right to contribution. It is, at any rate, clear that no one except the judgment-debtor in the decree attached can object to the attacher's right to execute. The attachment itself cannot be held to be invalid even if there would be any valid defence by his co-judgment-debtors to an application by him to execute the decree. I cannot, at the present stage, decide the question of his right to take out execution. The Civil Procedure Code does not expressly lay down the rules as to the course to be pursued by the Court if several persons who have rights in a decree all seek to execute it. Rule 15 of Order XXI provides for cases where a decree has been passed jointly in favour of more persons than one. But there is no rule laid down where there are several attaching creditors all entitled to execute according to Rule 53 or where an attaching creditor and his judgment-debtor both seek to execute the decree. If execution is allowed in favour of any one of them and if more than one person having interest in a decree are entitled to execute it, provision must, of course, be made for the protection of the interests of other persons having rights in the decree. There does not appear to be any objection to execution being granted jointly in favour of more persons than one. The rights of all parties interested in the proceeds of execution should, of course, not be affected by any one of them being allowed to execute. The Court would also have power to appoint a Receiver to execute the decree and to pay over the proceeds to the various parties interested. If the attaching creditors in this case or any of them apply for execution, regard must be had to these observations in deciding the proper course to be adopted.

7. The order of the lower Court dismissing the appellant's application is set aside and the petition for execution is remanded to the lower Court for fresh disposal according to law. It will be the duty of the lower Court, before passing final orders, to take steps to protect the rights of all parties to the petition. If the attaching decree-holders also apply for execution, it will decide, on a consideration of all the circumstances of the case, which one or more of the parties should be allowed to take out execution. The costs of this appeal will abide the result so far as the appellant and the judgment-debtors are concerned. The appellant must pay the 18th respondent's costs of this appeal.

Sadasiva Aiyar, J.

8. I have had the advantage of perusing the judgment of my learned brother in this case. So far as the 1st respondent, viz., the assignor of the petitioner is concerned and so far also as the respondents Nos. 2 to 15, who are the judgment-debtors, are concerned, I entirely agree with my learned brother, for the reasons stated by him, that their objections to the petitioner being allowed to execute the decree as the assignee of the decree-holder cannot be legally sustained. The 16th respondent is the 15th judgment-debtor and is also the decree-holder in Small Cause Suit No. 905 of 1903 of the same Subordinate Judge's Court in which the petitioner wants to execute his decree. He has attached the decree passed against him and others in favour of his own decree-holder. I have grave doubts, having regard to Clause (4) of Order XXI, Rule 18 of the Code of Civil Procedure, 1908, and illustration (d) to that rule and to the wording of the rule itself, whether the 16th respondent could be allowed to take any other steps in connection with the execution of his Small Cause decree except applying to the Court to set-off the amount due to him as decree-holder in Small Cause Suit No. 905 of 1903 against what is due by him and others as judgment-debtors in Original Suit No. 13 of 1903. In Sinnu Pandaram v. Santhoji Row 12 M.L.J. 398; Boddam and Bashyam Iyengar, JJ. held that the decree for the smaller amount becomes incapable of execution and the decree for the larger amount less the decree for the smaller amount is alone capable of execution where there are such cross-decrees. There was a doubt under Section 246 of the old Code whether the holder of a decree passed against several persons jointly and severally may treat it as a cross-decree in relation to a decree passed against him singly in favour of one or more of such persons, but that doubt has been set at rest in favour of an affirmative answer by the new Clause (4) and the new illustration (d) introduced in Order XXI, Rule 18. Though, in my opinion, the holder of the decree for the smaller amount cannot apply for execution, his rights and priorities should be decided as if the decree for the larger amount was attached at his instance as soon as either of the decree-holders applies for execution.

9. As regards the 17th and 18th respondents, who hold decrees against the 1st respondent passed by the Tiruvadi District Munsif's Court, they had the present decree of the Tanjore Subordinate Judge's Court attached through other District Munsif's Court than the Tiruvadi District Munsif's Court. Under Order XXI, Rule 53, the attachment is to be made by the issue to the Subordinate Judge's Court of a notice by the Court which passed the decree requesting the Subordinate Judge's Court to stay the execution of its decree till the 17th and 18th respondents or the 1st respondent applies for the execution of the Subordinate Judge's Court's decree. This power of attachment then by Order XXI, Rule 53, was vested in the Tiruvadi District Munsif's Court so far as the execution of the decrees of that Court passed in favour of the 17th and 18th respondents is concerned. This power is, by Section 42 (Section 228 of the old Code), also vested in the Courts to which those decrees of the Tiruvadi District Munsif were sent for execution. The Full Bench case of Swaminatha Ayyar v. Vaidyanatha Sastri 15 M.L.J. 119 was decided on the ground that the bringing, of the legal representative of the judgment-debtor on the record under Section 234 (present Section 50, Rule 1) is not a proceeding connected with the exercise of the powers in executing a decree, but is a preliminary step towards those powers being exercised by the Court to which the decree has been transferred, and hence the latter Court had no power to pass orders under Section 234. But orders of attachment in execution of a decree, though those orders are effected by sending notice to other Courts, are made in exercise of the powers in executing a decree and, hence, it seems to me that, under Section 42, the Court to which the decree is sent for execution can also itself exercise the powers mentioned in Order XXI, Rule 53, Clause 1(6), as exercisable by the Court which passed the decree. I am, therefore, of opinion that, without bringing into service the doctrine of waiver relied upon in Thimboo Pillay v. Sriramulu Naidu 17 M.L.J. 300 it is possible to hold that the attachment made by the 17th and 18th respondents through the Tanjore and Tiruvalur District Munsif's Courts are perfectly valid. I may remark, in passing, that I feel serious doubts whether the doctrine of waiver can validate the attachment made by a Court which had no jurisdiction to do so and whether substantive lights given by the attachment could be placed on the same footing as the issue of a notice to the legal representatives of a deceased judgment-debtor and though the waiver of an objection to the jurisdiction of a Court to issue notice to the legal representative might be valid, I am, as at present advised, not at all clear that an objection to the jurisdiction of a Court to attach properties can be waived by mere omission to take objection to such attachment. However, on the view I take of the powers of the Court executing a decree sent to it for execution, it is not necessary to give a final opinion on this point.

10. In the result, I agree that the order of the lower Court dismissing the appellant's application should be set aside and the petition for execution should be remanded to the lower Court for fresh disposal according to law and that the costs of the appeal should be awarded to the 18th respondent alone, the other's costs abiding the result.


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